Antitrust Law Daily Wrap Up, ANTITRUST—NYAppDiv: New York Antitrust Claims Proceed Against Underwriters of Airline Special Facility Bonds over Alleged Group Boycott of Bond Structure, (Mar 20, 2013)

By Tobias J. Gillett, J.D., LLM.

A structured finance attorney could proceed with a claim under New York’s Donnelly Act that underwriters of airline special facility bonds engaged in a group boycott of a structure she created for those bonds, a New York appellate court has ruled (Williams v. Citigroup, Inc., March 19, 2013, per curiam).

The structured finance attorney had developed and patented a structure for airline special facility bonds used to finance construction of municipal airports. The attorney filed suit against underwriters of those bonds, alleging that the underwriters had engaged in a group boycott of her structure, because it would lower the risk of the bonds and thus lower the interest paid on them, in violation of the Donnelly Act. The trial court dismissed the attorney’s case, and she appealed. The Appellate Division reversed the trial court’s decision, concluding that the attorney had sufficiently alleged a Donnelly Act claim. The court determined that she had standing to bring her claim, even though she did not participate in the market for underwriting ASF bonds, because the alleged group boycott of her structure sought to restrain trade in that market by attacking her method of facilitating competition with the underwriters.

Moreover, a previous dismissal of her Sherman Act claim did not preclude her Donnelly Act claim here, because the federal courts employed heightened pleading requirements for antitrust claims. The attorney’s allegations were sufficient “to raise an inference of conspiracy.” Finally, an attack on the attorney’s definition of the relevant market relied on facts outside the complaint, and that definition was a “fact-intensive inquiry” generally “not suited to resolution on a motion to dismiss.” Since the attorney sufficiently alleged her Donnelly Act claim, the court concluded that her claim for interference with prospective economic advantage also should not have been dismissed. The court did dismiss a claim for tortious interference with contract and a claim under New York’s consumer protection law.

The case is No. 2013 NY Slip Op. 01771.

Attorneys: Michael A. Bowse (Berns Weiss LLP) for Linda Grant Williams. Carmine D. Boccuzzi, Jr. (Cleary Gottlieb Steen & Hamilton LLP) for Citigroup, Inc.

Companies: Citigroup, Inc.

Cases: Antitrust NewYorkNews